July/August 2013 by Grocery Business

July | August 2013 Vol 3 | No 4 $9.95

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July/August 2013 Volume 3, Number 4 www.grocerybusiness.ca Co-Publisher and Executive Editor Karen James 416-561-4744 KarenJames@grocerybusiness.ca Co-Publisher and Content Director Kevin Smith 416-569-5005 KevinSmith@grocerybusiness.ca

PEOPLE • PRODUCTS • PROMOTION • PASSION

publishers’MESSAGE

Executive Vice-President Content and Market Development Dan Bordun 416-817-5278 DanBordun@grocerybusiness.ca Managing and Online Editor Noelle Stapinsky Contributing Editors Sally Praskey, Angela Kryhul Contributers Dr. Sylvain Charlebois, Joel Gregoire, Michael Marinangeli Creative Agency Boomerang Art & Design Inc. boomart.net Subscription changes & updates or general inquiries: info@grocerybusiness.ca Grocery Business Advisory Council Phil Donne, Campbell Company of Canada Tom Barlow, Canadian Federation of Independent Grocers Perry Caicco, CIBC World Markets Chris Terrio, CROSSMARK Canada Inc. Nancy Croitoru, Food and Consumer Products of Canada Tim Berman, Kraft Canada Inc. Michael Marinangeli, MIDEB Consulting Inc. Cheryl Smith, Parmalat Canada Mark Ayer, Procter & Gamble Inc. David Wilkes, Retail Council of Canada Cori Bonina, Stong’s Market © Copyright 2012. All rights reserved. No part of this magazine may be reproduced without written permission of the publisher. GST Registration No. 83032 6807 RT0001 Publications Mail Agreement No. PM42211029 ISSN 1927-243X Grocery Business Media 390 Queen’s Quay W., PO Box 40085 Toronto, ON M5V 3A6 COVER: WHOLE FOODS OAKVILLE PHOTO BY: FREDRIK CARLBERG

With this issue, Grocery Business begins its third year serving the industry. It’s been an amazing journey and we would like to thank you, our readers and advertisers, for your support. Karen James and Kevin Smith, Co-Publishers

karenjames@grocerybusiness.ca kevinsmith@grocerybusiness.ca grocerybusiness.ca Follow us on Twitter @grocerybusiness

Grocery Business July | August, 2013 Volume 3, Number 4

contents DEPARTMENTS 5

Publishers’ Message

Front End

People & News

13 Open Mike

Ethnic stores offer value

60 Shelf Life: Salad Dressings

Produce department’s new best friend

Introducing smaller stores in urban markets won’t dilute their brand, as long as they do it well and do it wisely Maureen Atkinson, J.C. Williams Group

40 It Figures

The healthy heart

64 Launch It, List It

Notable new products

ON THE COVER

29 Organic Growth

Whole Foods Market has a growth spurt

FEATURES 10 Opinion: Calling the Shots

49 20th Annual Grand Prix New

58 Marketers Go Digital

17 Rooftop Greenhouses

Celebrating Canadian innovation

59 Chipping In

20 C-Suite - Leaders on Leadership

SpongeTowel cleans up with Top Chef Canada

As major retailers join forces, Walmart still rules

A new high for local food movement

Coca-Cola’s CEO, John Guarino, talks leadership

23 C-Store Channel

23 A fresh take 26 A Convenient Path to Growth

43 The Power of In-store Marketing POPAI Shopper Engagement Study

Product Awards

55 Soaking Up Sales

56 Takin’ it to the Streets

Home delivery makes a comeback

Whole Health

BrandSpark’s 8th Annual Marketers’ Survey

79th Annual Food & Allied golf tournament

66 Longo’s 26th store opens in Oakville, Ont.

29 Whole Foods 34 Healthy Prospects Natural health products rising 36 Food Intolerances: Catering to the Consumer 38 Healthy Snacking: Going Nuts

grocerybusiness.ca

July | August 2013

Front End

Frank Coleman

Bruce Logan

Mike Coleman

Ed Holik

CFIG honours four with Life Member Designations Frank Coleman and Mike Coleman of the Coleman Group of Companies in Corner Brook, Nfld. will both receive the honour. Frank Coleman is president and CEO of the Coleman Group. Mike Coleman is vice-president of Procurement, Wholesale and Distribution Operations, a board member of the Canadian Federation of Independent Grocers’ Distribution Council and a board member of United Grocers Inc. Also receiving Life Member Designations are

Bruce Logan, one of the founders of Village Food Markets in Sooke, B.C., and Ed Holik, executive vice-president, operations, Weston Foods North America. The Colemans and Holik will be officially recognized at CFIG’s Luncheon of Honour on September 30 at Grocery Innovations Canada 2013 in Toronto. Logan will be recognized at Grocery Showcase West taking place April 6 and 7, 2014, at the Vancouver Convention Centre.

Award winning gardein. ™

In your grocer’s freezer, on our founder’s mantle.

Thank-you!

Canadian Grand Prix New Product Award Winner A W A R D E D

J U N E

2 0 1 3

YVES POTVIN, PRESIDENT AND FOUNDER

www.gardein.com

Front End

Appointments Michele Buck has been promoted to president of Hershey’s, North America, from her previous position as chief growth officer.

CROSSMARK Canada has appointed Peter Ma as vice-president of client services and retail sales. Ma now leads the company’s client service and account executives teams. Tony Matta recently joined Kraft Canada as chief marketing officer, overseeing marketing for the Beverages, Grocery and Cheese sectors as well as Marketing Insights & Services and Innovation. Matta joins Kraft from PepsiCo.

Indigo Natural Products recently added three new members to its team. Walt Snow, formerly of Tetley Tea, joins as eastern sales manager. Bobbi Parama

key account manager, is based in Calgary, calling on Prairie retail accounts. Darren MacRae Munro,

based in Vancouver, is Indigo’s new brand manager who will also manage some retail accounts.

Allan MacDonald is the new chief operating officer for Canadian Tire Retail. He most recently was chief marketing officer.

Alasdair McKichan, the former president and CEO of Retail Council of Canada (RCC), was inducted into the Canadian Retail Hall of Fame on June 4. McKichan joined RCC as its first CEO in 1963 and served in that capacity until 1971, as well as from 1975 to his retirement in 1994. Mark Baum has taken on the job of senior vice-president of industry relations and chief collaboration officer for the Food Marketing Institute. Baum most recently was the managing partner of MARCAT Group LLC. After a 27-year career with Sun World International, Clay Wittmeyer has joined Naturipe Farms in the newly created position of director of international sales.

Industry veterans named as

2013 Golden Pencil Award recipients The Food Industry Association of Canada has chosen Dino Bianco of Kraft Foods and Eric R. La Flèche of Metro Richelieu Inc. as this year’s recipients of the prestigious Golden Pencil Awards. Dino Bianco has led Kraft’s Beverages Business Unit and Kraft Canada since January 2013. Since joining Kraft in 1990, Bianco has served in a number of leadership positions including president of Kraft’s International & Foodservice business and the Marketing Services and Innovation organizations. Eric R. La Flèche became president and CEO

grocerybusiness.ca

of Metro Inc. in 2008. He joined Metro in 1991 as head of real estate and has held several positions including executive vice-president and chief operating officer, president of Loeb Canada Inc., and senior vice-president of the Super C banner. He is a member of the Metro Inc. board of directors and holds an MBA from the Harvard Business School and a law degree from the University of Ottawa. The Golden Pencil Award recognize individuals who, through career dedication, have made significant and worthwhile contributions to the Canadian food industry.

Bianco and La Flèche will be honoured at a ceremony on November 25, 2013 at the Royal York Hotel in Toronto. To order tickets, visit GoldenPencilAward.com.

Dino Bianco Executive Vice-President and President, Beverages Canada, Kraft Foods Group

Eric R. La Flèche, President and CEO, Metro Richelieu Inc.

July | August 2013

IN FOOD RETAILING, WALMART IS STILL CALLING THE SHOTS Both Sobeys and Loblaw have made their moves. Metro could be next. But let’s not kid ourselves: Walmart is still king By Dr. Sylvain Charlebois

Make no mistake: The deal makes sense for everyone, including Canadian consumers. Loblaw’s $12.4 billion purchase of Shoppers Drug Mart gives the leading Canadian grocer an edge over its biggest menace, Walmart. Not only will Loblaw now be able to sell many products with higher margins – like pharmaceutical products – a plethora of branding synergy opportunities will emerge as a result of this acquisition through private-label and loyalty programs, and much more. In terms of real estate, the addition of several downtown stores across small town Canada will give Loblaw a key edge in managing socio-demographic shifts. Some experts have gone so far as to claim that this deal will be transformational for Canadian food retailing. It is indeed

significant since it is the biggest industry transaction Canada has ever seen. But transformational? Not quite. The most transformational acquisition Canada has seen in food retailing remains Walmart’s purchase of Woolco back in 1994, full stop. Everything happening in food distribution today continues to be affected by it. Most Canadians didn’t realize it then, but Walmart’s entrance into the Canadian market would change everything: the way we shop, what we buy, and most importantly, how we purchase and value food. Ever since Walmart entered the Canadian market, it never shied away from its ambition of becoming Canada’s top food retailer. In fact, Walmart added almost $700 million to its food sales this year alone. Loblaw’s latest response suggests it isn’t

WHAT’S THE BIG DEAL? SOBEYS BUYS CANADA SAFEWAY

$5.8 billion

12 manufacturing

9 million sq.ft

213 full-service

4 primary

$1.8 billion

PURCHASE PRICE

OF RETAIL SPACE

DISTRIBUTION CENTRES

July | August 2013

FACILITIES

SAFEWAY GROCERY STORES

IN REAL ESTATE

“Sobeys expects to benefit from increased economies of scale… capturing annual cost synergies of $200 million within three years.” Marc Poulin, president and CEO of Sobeys

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Retail Consolidation

eager to let go of the top position anytime soon, and that it views Walmart as a serious threat. Walmart’s purchase of Woolco generated a few copycats, including Target’s recent acquisition of Zellers. As Target’s first venture outside the U.S., with almost 200 stores set to open by 2020, Canada is considered fertile ground for future growth. Desperate to effectively penetrate the Canadian food market, Sobeys – Loblaw’s closest rival in food retailing – agreed to become Target’s most important food distributor for a limited time. The strategy seems to be paying off as Target is expected to top $300 million in food sales in 2013. Given the very stagnant market, these sales are coming from its competition. But in light of last month’s purchase of Safeway’s Canadian grocery stores for $5.8 billion, Sobeys might not prop up Target’s effort for long as it has other plans for growth in a very condensed, mature marketplace. Meanwhile, in Quebec, with Loblaw’s purchase of Shoppers, many are speculating that Metro will hunt down Jean Coutu, a very large Quebec-based pharmacy chain. Jean Coutu himself stated that his company was not for sale, but that was before the Loblaw-Shoppers announcement. Equally affected by the acquisition, both Metro and Jean Coutu may be ready to talk. Whether or not the Loblaw-Shoppers deal will work is difficult

to tell at this point. Loblaw has a poor track record of streamlining processes quickly. The Shoppers purchase will likely add more pressure and could create opportunities for the competition. The market is evolving quickly, and while convenience and accessibility are imperatives in food retailing, the absolute key to success remains price. And Walmart understood decades ago that logistics are critical in offering competitive prices to consumers. That will be Loblaw’s main challenge. Ever since the Walmart/Woolco deal in 1994, food retailers have been looking at the Canadian market very differently. More consolidation is expected. Metro may consider Overwaitea Food as its consolation prize, but that’s highly doubtful. Certainly, after the Quebec government’s hostile reaction to the attempt by Lowe’s to acquire Rona last year, it’s highly doubtful anyone would want to touch Metro. Both Sobeys and Loblaw have made their moves. Metro could be next. But let’s not kid ourselves: Walmart is still calling the shots.

Dr. Sylvain Charlebois is Associate Dean at the College of Management and Economics at the University of Guelph in Ontario. (Troy Media)

LOBLAW BUYS SHOPPERS DRUG MART

$12.4 billion

13.7 million sq.ft

1,295 SDM

$10.8 billion(2012)

51,300 SDM

$300 million (est.)

PURCHASE PRICE

LOCATIONS

EMPLOYEES

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OF RETAIL SPACE

SDM SALES

“It’s not just about stripping out costs and banging the businesses together,” Galen G. Weston, executive chairman Loblaw

SAVINGS OVER 3 YEARS

July | August 2013

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Open Mike

Ethnic Stores

High-quality, cheaper produce fuels explosive growth By Michael Marinangeli

A colleague and I recently spent a day visiting ethnic grocery stores in an effort to determine why they are so successful in many markets across the country. Our destinations included Adonis Markets (Mediterranean/Middle East), Starsky Foods (Eastern European), Oceans Fresh Food Market (multi-ethnic), and T & T Supermarket (Asian), as well as some traditional stores in each trading area. The ethnic stores we visited were busier throughout the day. They were well staffed and well stocked, with the main common denominator being outstanding produce at low prices. I conducted price checks on a basket of 10 key produce items in every store, and found the prices to be far cheaper in the ethnic stores – in some cases, up to 50 per cent less on the total basket. Throughout the 1990s, when we started to roll out discount stores, one of the key drivers and points of difference was to offer cheaper produce than in conventional stores. Until then, produce was a high-margin category and seldom used as a loss leader. When stores were converted from conventional to discount, we dramatically lowered produce prices, and the produce sales ratio improved substantially. We got an additional surprise: Produce shrink decreased because the products turned faster, resulting in less waste. Reduced shrinkage acted as a margin enhancer. Consumer savings were significant and shoppers voted with their wallets as discount penetration grew. This trend continues today. The traditional wisdom in the grocery

grocerybusiness.ca

business was to price perishable departments higher than grocery to compensate for increased shrinkage, labour and supply costs. The ethnic stores obviously have a different philosophy, and their loyal and growing clienteles seem to appreciate their approach. Ironically, the greatest weakness of these stores is their mainline grocery departments. Their ethnic grocery assortment is outstanding and truly caters to their clientele, but they fall short on assortment and pricing on mainline domestic grocery items. However, as ethnic stores develop expertise and gain traction and attention from North American manufacturers, their conventional grocery departments will evolve. The grocery industry is facing many challenges from the ever-changing retail landscape. Stores catering to ethnic communities are growing in leaps and bounds. Produce freshness, quality, presentation and prices are their calling cards, as well as assortment in departments that cater to their local community. It may be time to rethink our conventional store margin structure in perishable departments to compete with new players that operate in a different paradigm.

Here are a few suggestions: • Allocate dedicated resources to manage the buying, merchandising and operations of conventional stores in ethnic communities. This is too complex a task to tack onto your existing structure. • Recruit staff who truly know this business. Larger organizations can consider acquisitions similar to those made by Loblaw (T & T) and Metro (Adonis) to participate or gain knowledge. • Play to your strength – mainline grocery with better pricing, assortment and private brands. • Make a conscious decision to become more competitive in produce. Otherwise, you will notice a constant erosion of your customer base.

Michael Marinangeli is a principal at MIDEB Consulting Inc. and a retailing veteran with more than 40 years of experience. mjmarinangeli@gmail.com

July | August 2013

Health Check

Checking In with

Health Check

By Carol Dombrow, Registered Dietitian, Heart and Stroke Foundation™

SHOP, LEARN AND EAT

oday’s savvy consumer wants both nutrition and convenience when dining out. As busy schedules compete for shoppers’ attention, grocery stores are becoming a go-to option for many Canadians to purchase meals-to-go. It’s no surprise that Canadians appreciate convenience. So it’s perhaps only natural that

they choose to buy retailer meal solutions (RMS) while they shop. In fact, according to a recent survey, 42 per cent of today’s consumers say they purchase RMS four or more times each month. Conversely, 67 per cent of Canadians polled say it’s important to pay attention to nutrition when dining out. Yet, there seems to be a missing piece when it comes to providing Canadians with exactly what they want. And what they want is food that is affordable and convenient but that they can also feel good about consuming. They want to know that they are not sacrificing nutrition for convenience. In fact, almost half of Canadians polled say that having better-for-you options available is important to them. Yet, it is not always easy to spot what is and what is not healthy. Looks can be deceiving and a seemingly healthy-looking

TIP:

salad can pack a surprising amount of calories and fat. Without the nutrition information readily available, a well-meaning consumer’s attempt at purchasing a healthy dish could be thwarted. Health Check, the Heart and Stroke Foundation’s nutrition information program, has recently made it mandatory for all participating restaurants to have the nutrition information readily available for their diners. British Columbia’s Informed Dining program (www.healthyfamiliesbc.ca) also encourages restaurants to make nutrition information available to their consumers. This helps diners make informed decisions about what they eat. Shouldn’t they have the same opportunity when dining at a grocery store?

Consider putting nutrition information right by the RMS options to help your shoppers make a healthy decision. For more information about how Health Check can help, visit healthcheck.org.

Socially speaking Health Check engages with Canadians in a variety of ways. Its digital presence is undeniable and makes it easy for Canadians to connect in whichever way they prefer.

Blogs - Healthcheck.org continues to share blogs from the Foundation’s registered dietitians. These blogs range in topics from tips, to personal challenges or recipe suggestions. Visit healthcheck.org.

Twitter - @HSFHealthCheck successfully engages with its nearly 700 loyal followers, regularly communicating with them to share the latest tips, recipes and information.

Pinterest - HSF Health Check regularly shares recipes with its Pinterest community.

YouTube - The program’s HSF Health Check channel is filled with a variety of recipes that help Canadians shop, cook and live well.

Health Check

Summer reading: Nutrition Facts Table The Nutrition Facts Table is one great way for your customers to learn more about a product and make a healthy choice. But it is first important to truly understand the table.

Nutrition Facts Per 3/4 cup (175 g) Amount Calories 160 Fat 2.5 g Saturated 1.5 g + Trans 0 g

% Daily Value

Cholesterol 10 mg Sodium 75 mg Carbohydrate 25 g Fibre 0 g Sugars 24 g

4% 8%

• The ingredient list starts with the ingredient used most in the product. • The amount of calories and nutrients listed in the Nutrition Facts table is based on the product’s Serving Size. • Twice the Serving Size means twice the calories and nutrients.

3% 8% 0%

• % Daily Value Provides a quick overview of the nutrient profile of a food. Look for a higher % Daily Value for nutrients such as fibre, vitamins A and C, calcium, or iron. Look for a lower % Daily Value for fat, saturated and trans fats, and sodium. • Limit the amount of saturated fats and avoid trans fats. Low saturated fat is 2 grams or less.

Protein 8 g Vitamin A Calcium

HERE ARE A FEW QUICK TIPS:

2 % Vitamin C 20 % Iron

0% 0%

Skill-it with a skillet The desire to eat well and prepare home-cooked meals that are both good and good for you can often be met with challenges like lack of time, skill or easy recipe availability. Both Health Check and Health Canada (www.healthycanadians.gc.ca) have recognized the need to help Canadians learn more about what to cook, and how to cook it, encouraging Canadians to improve food preparation skills. It is time to step back into the kitchen and give home-cooking a second chance.

So, what’s going on at Health Check to help Canadians cook well? • Health Check, a program with a strong focus

• Cooking can also be a social experience.

• The Heart and Stroke Foundation will be

on encouraging healthy home cooking, has

Health Check is partnering with Le Cordon

holding its annual back-to-school campaign

been providing Canadians with resources

Bleu Ottawa Culinary Arts Institute to

that encourages parents to get their kids

and recipes for nearly 15 years. Today, it

develop weekend classes to start within

off to a healthy start to the school year.

continues to provide Canadians with free,

the next few months that teach Canadians

The Time to Start campaign (August 19 to

healthy recipes on healthcheck.org as well as

hands-on skills in preparing healthy recipes

September 8) provides parents with free

on the program’s Pinterest page.

that meet Health Check’s nutrient criteria.

meal plans that make food preparation easy.

For more information about the initiatives, visit healthcheck.org and follow us on Twitter @HSFHealthCheck.

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Getting on top of

local food Rooftop greenhouses present ultra-local produce and ecoenergy opportunities for grocery retailers By Noelle Stapinsky

grocerybusiness.ca

Consumers are hungry for local food. And now, more than ever, savvy Canadian shoppers want to know where their food is coming from. What if a grocer could tell them that the produce was harvested that morning from the store’s own rooftop greenhouse? While the concept of rooftop greenhouses is not new, the challenge has always been the actual process of building one on a roof. There are a number of structural considerations, not to mention zoning and building-code issues. But rooftop greenhouse technology has come a long way in recent years. Progressive urban farming companies such as New York-based Gotham Greens and Montrealbased Lufa Farms have led the charge, developing successful business models and innovative technology to grow impressive amounts of produce in urban settings. Gotham Greens’ first greenhouse facility was

built on top of a warehouse in an industrial section of Brooklyn. The 15,000-sq.ft. facility started harvesting in 2011, producing more than 80 tons of hydroponic produce annually that is sold to select grocery retailers and restaurants across New York City. Recently, Whole Foods – one of Gotham Greens’ retail clients – formed a partnership with the urban farming company to incorporate a rooftop greenhouse into a new retail location in Brooklyn. “As far as we know, this is the first of its kind to be integrated into a supermarket [in the U.S.],” says Viraj Puri, co-founder of Gotham Greens. “Whole Foods wanted to incorporate environmentally sustainable features into the store, and onsite food production is a part of that.” The 20,000-sq.ft. facility, which is being installed directly above the supermarket’s produce section, will produce 200 tons of food July | August 2013

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per year, as well as reduce the store’s overall ecological footprint in terms of water and energy use. “We will be recirculating all of our irrigation waters for reuse,” says Puri. “We’ll also be incorporating advanced insulation materials to reduce heating costs, and an evaporative cooling system to minimize cooling costs in the summer.” Gotham Greens will design, finance, build and operate the greenhouse. Once the produce is ready to be harvested, it will be sold to that location and other Whole Foods stores across the city. Lufa Farms built its first rooftop greenhouse in Montreal on a three-story industrial building in 2010. This 31,000-sq.ft. facility produces enough fruits and vegetables to feed about 2,000 people on an ongoing basis, which Lufa sells directly to consumers through an online ordering system. “We grow everything – tomatoes, cucumbers, bok choy, and even strawberries,” says Mohamed Hage, co-founder and president of Lufa Farms. “I like to think of it as a living grocery store.” The company has already developed second- and third-generation technologies for greenhouse facilities, and is currently building a second facility in Laval, Que. “Our third-generation greenhouses are incredibly light and will require minimal infrastructure changes for the building owner,” says Hage.

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While Lufa is currently scouting major cities in North America to expand its direct-to-consumer produce business, it has also developed a B2B business model that, similar to Gotham Greens, would be designed, financed and operated by the Montreal company. Hage admits that Lufa has been approached by a number of grocery chains. “What’s interesting, in the case of a grocery store, is that we would take the waste heat generated from their fridges and use it in the greenhouse to heat the crops,” he says. Although it’s going to take time to establish best practices, both companies see great potential for grocery retailers in many different regions where the climate often dictates what local foods are available. For grocery retailers in Canada, offering a daily harvest of fresh produce that’s just steps away, 365 days a year, could be an interesting differentiator in the race to feed consumer demand for local food.

Mohamed Hage, co-founder and president of Lufa Farms

interesting, “inWhat’s the case of a grocery store, is that we would take the waste heat generated from their fridges and use it in the greenhouse to heat the crops

”

LEADERS

ON LEADERSHIP

KJ: Whose leadership style do you most admire, and why? JG: That’s a hard question, as I admire many traits of many leaders – a blend, if you will. Clearly, in this day and age, a participative approach will get you further than an authoritative one. But a leader must have a variety of styles to use based on the situation.

KJ: Can you describe a defining career experience?

John Guarino,

P H O T O : R O D N E Y D AW

president of Coca-Cola Refreshments Canada As part of Grocery Business’s series on leadership, Karen James, executive editor, interviewed John Guarino, president, Coca-Cola Refreshments Canada, on leadership and the challenges of being an ex-pat executive for 26 years.

Karen James: How do you personally define leadership? John Guarino: Leadership is the art of influencing people to achieve the company’s vision as if it is their own. I like this notion because it shows that enabling individuals is a critical part of being a leader. It’s also about commitment and working towards a common goal. Looking in my own world here at Coca-Cola, I know the power 20

July | August 2013

our “2020 Vision” holds within our organization. Globally, we operate in over 200 countries. Our chairman and CEO Muhtar Kent was tireless in creating and leading the organization to realize the values inherent in this vision. I am happy to say that, three years in, we are well on track to meet our 2020 goals. When I was thinking about this question, I did a search on the definition of leadership. There were over 100 pages of results, which tells you how difficult it is to define. I have a quote on my desk attributed to “anonymous” that says, “Leadership is a privilege bestowed on you by people who believe in you.” So while not a technical definition, I love the picture it paints.

JG: I was living and working in Switzerland in the Strategic Planning Department, and on a Friday afternoon I was asked if I could move to Sweden for six months to temporarily look after the Public and Government Affairs and Communications department. Oh, and I had to be there Monday morning, which was an interesting discussion that night with my wife! I couldn’t understand why they had asked me to do this; I wasn’t thrilled, since the role was in a support function as opposed to being in country general management, which was my goal. I felt frustrated since I thought I had been clear about what my career ambitions were. I even considered turning it down. In the end, I accepted it and loved both the role and living in Stockholm. I was then moved into a finance role, yet another functional role that I didn’t really see coming. Once that short-term assignment was over, I got my first job in country general management. These were defining experiences because they taught me that there is not a single, simple career path. The company was preparing me to be an executive by giving me many varied experiences to challenge and develop me. I learned that, as an executive, rather than expecting a linear path up the career ladder, you must be prepared to take on many roles and challenges in areas outside your comfort zone. grocerybusiness.ca

C-Suite John Guarino

President, Coca-Cola Refreshments Canada

Career Path

1997-2000: Joined The Coca-Cola Company as senior region manager for the Gulf States after 15 years with the Philip Morris Company, where he ran markets across Europe, Africa and the Middle East. 2000-2002: President of the Middle East and North Africa Division headquartered in Bahrain.

KJ: Did you have a coach or mentor who had a strong influence on your career? JG: When I first moved abroad in my international career, I had an informal mentor who had spent most of his career outside of his native Australia. He not only helped me navigate my corporate career, but more importantly, taught me how to balance the demands of my career with my family life. His advice was to view every posting as a family experience in addition to a career move. So for our family, this meant exploring the countries and regions where we were based, learning the cultural traditions and attempting to learn the language. We tried to view every weekend as a chance for a family excursion to do things we would never do anywhere else. My kids still haven’t forgiven me for taking them to the Potato Festival in Berlin! I have been an expatriate living in seven different countries for 26 years, and I think that my mentor’s counsel helped me, and my family, immensely.

KJ: Coca-Cola recently relocated its head office to downtown Toronto; what drove that decision? JG: We were at our Overlea Blvd. location (in a suburb of Toronto) for nearly 50 years. It was originally built to accommodate our head office as well as a production and distribution facility, but we no longer were using the majority of the space. We ultimately made the decision to relocate based on the financial viability of moving to the King Street East community. It offered us many benefits; it was central for our associates and easily accessible by grocerybusiness.ca

2002-2005: CEO of Coca-Cola Bottling, Germany. 2005: Moved to London, U.K., to become regional director, Bottling Investments Group for Europe, Middle East and Africa. Was responsible for managing whollyowned or managed bottling businesses, as well as representing Coca-Cola’s interests on boards of directors of bottlers in which the company owned an equity share. Artwork in Coca-Cola’s new Toronto office

public transit. We were able to design the space ourselves, which allowed us to incorporate feedback from our associates, who told us that the most important thing for them was an environment that fosters innovative thinking and collaboration. I think the new office provides that.

KJ: And can you tell us what you are reading now? JG: I am just finishing Why Nations Fail, by Daron Acemoglu and James Robinson. It’s an overview of various civilizations over the last thousand years, and answers the question of why some countries are rich and successful, while others are poor and a social disaster. The countries that succeed have institutions that ensure people participate directly in the success of the economy, while having a say in political outcomes. Of course, these successful countries started with visionary leaders who created truly participative economic and political structures. Business isn’t that different really. Successful leaders create an environment and culture where everyone’s voice is heard, ensuring everyone has a share in the success of the company.

Industry Boards

Fulbright Commission in Germany, and the board of Food & Consumer Products of Canada.

Education

Has a Bachelor of Science degree in Commerce from Rider University in Lawrenceville, N.J., and a Master of Business Administration from Northeastern University in Boston.

Personal Interests

Enjoys tennis, skiing, running (marathons and half-marathons), travelling.

Family

John and his wife Cynthia have two children – William, a consultant in Washington, D.C., and Katherine, a junior at the University of Wisconsin.

Coke mural constructed entirely with bottle caps

July | August 2013

Flavour. Body. Versatility. y y. Fresh field-grown tomatoes from California have the flavour and body or â&#x20AC;&#x153;Meatinessâ&#x20AC;? that make them ideal for professional chefs and home cooks. Learn more about why Canadian consumers prefer field-fresh tomatoes and our harmonized food safety program at ctf-canada.com/trade.

HOW DO CANADIAN SHOPPERS SERVE TOMATOES AT HOME?

89%

Salads

82%

Sandwiches

70%

Burgers

67%

Ingredients

37%

Snacks Side Dishes

(Leger Marketing, California Tomato Farmers Canadian Consumer Survey (Online) July 10th, 2012)

www.ctf-canada.com

Convenience Channel

FRESH TAKE

ON THE C-STORE CHANNEL Convenience stores are facing flagging sales and competitive challenges with fresher offerings that target the needs of core shoppers By Sally Praskey

There was a time, several decades ago, when my friends and I would hop on our bicycles and, streamers flaring from the handlebars, make a beeline to the local convenience store for our fix of candy and comics. Our parents sometimes stopped at the same store for a jug of milk or a loaf of bread to tide them over between weekly trips to the supermarket. But those cramped family-owned stores of yesteryear are few and far between now as gas chains move into the convenience channel with larger, more sophisticated outlets offering everything from specialty coffee to home meal replacements. The c-store channel is, after all, on a quest to reinvent itself in the face of flagging results. From April 2012 to April 2013, sales slid 2.9 per cent, according to Statistics Canada. Other than a slight recovery from 2011 to 2012, c-store sales have been on a steady decline since 2008, while other food and beverage stores have recorded increases.

The gross margin for c-stores, at 21.4 per cent for 2011, was also lower than its food and beverage channel counterparts. “Traffic has been down for many convenience stores,” says Marc Fortin, an industry consultant and former president of the Montreal-based National Convenience Stores Distributors Association (NACDA). “And there have been a lot of store closures, especially among the independents.” The trend to gas stations closing their garages and moving into convenience has put a lot of pressure on the independents, he says, while the blurring of the lines among the grocery, drug and convenience channels has posed new challenges. But at the same time, these obstacles have brought more rigour and structure to the sector, resulting in more attractive stores with better offerings, adds Fortin.

TOP SELLERS According to a 2013 report from IRI titled Convenience Stores: Keep the Core; Appeal to More, the strongest growth in the U.S. c-store channel, by far, came from energy drinks. In 2012, this category enjoyed double-digit growth in both unit and dollar sales.

Other top sellers:

Chocolate Candy

grocerybusiness.ca

Salty Snacks

Sports Drinks

“In 2012, only four of the 10 largest convenience store categories grew at a stronger pace versus the industry average – all were beverage or tobacco categories,” says the IRI report.

Carbonated Beverages

July | August 2013

Convenience Channel

FORTIN IDENTIFIES THE FOLLOWING HOT BUTTON AREAS FOR C-STORES:

TOBACCO DEBACLE As the main distribution channel for tobacco, c-stores have been hard hit by the rise in contraband, especially in eastern Canadian provinces. In Ontario, for example, the contraband figure is as high as 30 per cent, says Fortin. Because cigarettes are a key driver of trip missions, that decline also impacts sales of other core items. C-stores in the U.S., on the other hand, are benefitting from the sale of electronic cigarettes – battery-operated devices with a liquid-filled cartridge that can contain flavouring as well as nicotine. Since bursting on the scene in that country in 2009, e-cigarettes have enjoyed explosive growth and now represent one of the fastest-growing convenience-store categories, according to the IRI report. Health Canada has not authorized stores in this country to sell nicotine-filled cartridges.

FOODSERVICE GETS FRESH Many c-stores are ramping up their foodservice offerings, particularly in the area of healthy choices. “Convenience stores can offer ready-to-eat options that are better for you, and distinguish themselves in that way” from the fast-food giants, says Fortin. For example, in the U.S., 7-Eleven is introducing more fresh food options and aims to double fresh foods to 20 per cent of sales by 2015. Tedeschi Food Shops, a

July | August 2013

WANTED: BEER AND WINE SALES

The sale of beer and wine represents a major – yet unrealized – opportunity for c-stores. To date, Quebec is the only province that allows it, along with a few locations outside the province that sell alcoholic beverages under special licence. The Canadian Convenience Stores Association (CCSA) continues to lobby the provincial governments to achieve the necessary legislative changes. “I think wine in English Canada would be a great opportunity,” says Fortin, noting that wine marketing typically doesn’t target younger people in the same way that beer might. “That’s a low-hanging fruit. Down the road, I think we’ll see if beer is an opportunity or not, but I think you need to start with wine to appeal to a more mature consumer.”

chain of convenience stores in the U.S. northeast, is building out its fresh food options with more glutenfree, organics and whole grains, says the IRI report. According to that report and research from Mintel, 31 per cent of consumers would like to see c-stores offer more fast-food sandwich restaurant concepts, as well as more coffee house/doughnut shop options. Burgers, pizza and chicken fast-food concepts are also looked at favourably. grocerybusiness.ca

Convenience Channel CREATE CURB APPEAL Besides maintaining their core value offerings across key categories, the IRI report recommends that c-store retailers: Develop a comprehensive health and wellness strategy targeted to the needs and wants of core shoppers; Identify CPG synergies (e.g. packaged beverage with combo) as enhanced convenience foodservice offerings are made available;

Identify opportunities to develop new offerings that solve key needs and wants (e.g. ready-to- drink protein drinks) of high-potential consumer segments.

CATER TO THE COMMUNITY Fortin says c-stores must invest in renovations to ensure the stores are attracting customers, and that their offerings are right for the neighbourhood. “If you have older people, you don’t want to have slushies and fast food. You have to make sure you adjust your offerings to your customers.”

ON THE

RIGHT TRAC On a recent U.S. trip I had the opportunity to check out RaceTrac, a chain of more than 300 retail gasoline convenience stores in the southeast U.S. RaceTrac stores are typically 5,000 sq.ft., and offer more than 4,000 retail and grocery items including salads, wraps and fresh fruit, as well as free wireless Internet and indoor and outdoor seating. Located on a high traffic corner in Orlando, Fla., the store I visited was part of a 12-bay gas-bar installation which had gone the extra mile to provide its customers with a great shopping experience. Spacious, clean, attractively designed and offering well-defined self-serve sections, including a 24-hour frozen yogurt bar, palatable hot meal offerings and (close to a Canadian’s heart) a very large walk-in beer fridge, a traveller could fully replenish without having to make another stop. Overall, a five-star convenience store experience. – Karen James, Executive Editor, Grocery Business

RaceTrac provides a spacious, clean shopping environment with well-defined self-serve sections, including a 24-hour frozen yogurt bar

grocerybusiness.ca

July | August 2013

A CONVENIENT PATH TO GROWTH 24 HOUR TRAFFIC PATTERNS BY CHANNEL G R O C E RY S T O R E S

PERCENT SHARE OF TRA F F I C

CONVENIENCE STORES 16

12-1

1-2

2-3

3-4

4-5

5-6

6-7

7-8

8-9

9-10 10-11 11-12 12-1

1-2

2-3

3-4

4-5

5-6

NOON

6-7

7-8

8-9

9-10 10-11 11-12

Source: The NPD Group/CREST - Canada; Year Ending February 2013

In order to grow their business in the

NOTE: NPD Group’s CREST study measures traffic and servings related to food and beverage items purchased at retail that are pre-prepared and eaten within six hours after purchase. (It does not represent all traffic at convenience or grocery stores)

competitive Canadian retail environment, companies sometimes need to step outside of their comfort zones, explore new opportunities and extend into new markets. For grocers, this may mean going bigger into the mass format or, in other cases, going smaller into the convenience space. Either way, it’s important to understand how consumer behaviour in the different segments varies, so as to capitalize on the different occasions that they address.

When consumers get food or beverages from a convenience store, some core differences stand out. One such disparity is the fact that, since 2007, home meal replacement (HMR) traffic at grocery stores has grown by just over two per cent per year on average, whereas convenience stores saw a three per cent average annual decline over the same time period. So why expand into convenience stores? The simple answer: Expanding into the convenience channel can allow grocery retailers to better reach

FAST FACTS: STORE VISITS

DOLLARS SP EN T

AVER AG E $ SP EN D

% OF ITEMS ON DEAL

(PER PERSON)

# OF ITEMS PURCHASED (PER PERSON)

CONVENIENCE STORES

278,897,000

$997,675,000

$3.58

15.8%

1.83

GROCERY STORES

380,485,000

$1,835,496,000

$4.82

21.5%

2.37

Source: The NPD Group/CREST - Canada; Year Ending February 2013

July | August 2013

grocerybusiness.ca

TOP ITEMS PURCHASED CONVENIENCE STORES 26

26% 18% 15%

G R O C ERY S T O R E S

CARBONATED SOFT DRINKS

CHICKEN/POULTRY ENTREES

18 CHIPS/PRETZEL/CRACKERS/CURLS

CARBONATED SOFT DRINKS

HOT COFFEE

14 SALADS

FROZEN/SLUSHED SOFT DRINKS

13 CHIPS/PRETZEL/CRACKER/CURLS

CANDY/CANDY BAR

SIDE DISH/APPETIZER SALADS

BOTTLED WATER

C O N VE N I E N C E S T O R E S

G R O C ERY S T O R E S

4 7 14

AGE 65+

55-64

45-54

35-44

+2%

16 0

G R O C E RY STORES

-1

18%

% DISTRIBUTION OF TRAFFIC BY AGE GROUP

HOME MEAL REPLACEMENT PURCHASES

18%

14%

18-34

<18

-2

-3%

-3

CONVENIENCE STORES

Source: The NPD Group/CREST - Canada; Year Ending February 2013

different demographics at different occasions. Convenience stores are the bastion for teens and Millennials. Kids under 18 and adults 18 to 34 account for just under 60 per cent of visits where food and/or beverages were purchased and consumed shortly afterwards. That number drops to 46 per cent for grocery HMR. Moms will always be a core demographic for grocery retailers, but Millennials represent an additional avenue for growth. It’s not just the who that differentiates the two channels, but also the when. Eighty per cent

of the food and beverages purchased (preprepared and consumed within six hours) at convenience stores are for a snack, which is almost double that of grocery HMR at 44 per cent. Obviously, the convenience factor influences this, but it’s also a fit for the on-the-go Millennial lifestyle. So what now? The top items ordered at convenience stores are soft drinks, salty snacks such as chips, coffee, slushed soft drinks, and candy such as chocolate bars. While those are fun and tasty, the lack of more substantive

ANNUAL TRAFFIC BY CHANNEL (IN MILLIONS)

C O N VE N I E N C E ST O R E S

450

G R O C ERY ST O R E S

400 350 300

food options for traditional or snacking mealtimes is apparent. HMR is becoming a more important facet of the grocery store experience. Bringing more of the HMR experience into convenience stores in a manner that appeals to Millennials may represent an additional opportunity for growth, and another avenue for brand exposure among this younger demographic. In the hyper-competitive Canadian retail space, going small can yield big dividends.

Joel Gregoire is a foodservice industry analyst for The NPD Group, a leading provider of comprehensive consumer and retail information.

250 200

2007

2008

2009

2010

2011

2012

2013

YEAR ENDING grocerybusiness.ca

July | August 2013

! m u Y

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LACTOSE FREE

DAIRY

F R E E,

VEGA

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WHOLE HEALTH

ORGANIC GROWTH Whole Foods Market is enjoying a growth spurt fuelled by a faithful following of health-conscious baby boomers and a new generation of shoppers – the Millennials.

uring the second quarter of this year, the natural foods retailer opened six stores ranging in size from 16,000 to 50,000 sq.ft. en route to its stated goal of 1,000 stores. For the last eight quarters, Whole Foods Market (WFM) has opened 25 stores averaging 37,000 sq.ft., and is on track to open 32 to 34 outlets in fiscal year 2013. “The demand for fresh, healthy foods continues to

grocerybusiness.ca

grow, and we see tremendous new store opportunities in all types of markets, from urban to suburban, as well as new and existing,” said co-founder and co-CEO John Mackey in discussing the chain’s latest quarterly results. “We have opened a record 32 new stores over the last four quarters, demonstrating our ability to internally fund and execute our accelerated growth plans. With 89 signed leases representing over three

July | August 2013

WHOLE HEALTH

P H O T O S C O U RT E S Y O F W H O L E F O O D S M A R K E T

feet in our development pipeline, we are well positioned to accelerate our square-footage growth through 2014 and hopefully beyond.” The goal is realistic and attainable, according to Alida Destrempe, grocery analyst at Kantar Retail global consultancy. “There is room for growth among niche/specialty retailers,” she says. “Whole Foods entered the market by filling in a gap for niche, natural/organic grocery retailers. Today, the natural and organic industry continues to grow [estimated to be worth US$61 billion by 2015]. As consumer demand for these products increases, Whole Foods is expanding its footprint.”

CANADIAN

EXPANSION

Several of these new stores are expected to be in Canada, a market Whole Foods entered in 2002. So far, the company has eight stores in this country – all in Vancouver or the Greater Toronto Area – with four more planned in Toronto, Ottawa and North Burnaby, B.C. However, Mackey has been quoted as saying the company could open as many as 40 more stores in Canada, and eventually record annual sales of $1 billion here. Analysts believe this is a distinct possibility, particularly for a differentiated retailer like WFM. “They’re doing well, so they’re looking to grow specifically in Canada,” says Maureen Atkinson, senior partner at J.C. Williams Group, Toronto. “They have a lot of operations in the U.S., but their Canadian operations are relatively small in relationship. So I think, like a lot of American retailers, they see Canada as kind of a next logical step for them, and so it does make sense that they would expand here.”

“The numbers indicate that specialty food stores are growing significantly faster than mainstream supermarkets,” notes Ed Strapagiel, a Toronto-based independent retail consultant. “Over the three years from 2009 to 2012, retail sales at Canadian multi-line supermarkets and grocery stores grew at 1.3 per cent, per annum (compound average), while specialty food stores’ sales increased at 5.1 per cent, per annum. These numbers imply there’s room in Canadian specialty food retail for more players.”

July | August 2013

Mackey has been quoted as saying the company could open as many as 40 more stores in Canada, and eventually record annual sales of $1 billion here.

IN THE BEGINNING

Left to Right: Craig Weller, Renee Lawson Hardy, John Mackey, circa 1980

Whole Foods Market was founded in Austin, Texas, when four local businesspeople – John Mackey (now co-CEO) and Renee Lawson Hardy, owners of Safer Way Natural Foods; and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery – decided the natural foods industry was ready for a supermarket format. The original WFM opened in 1980 with a staff of 19, and was an immediate success.

In 1984, WFM expanded into Houston and Dallas, and then beyond Texas to New Orleans in 1988. The company continued to grow, acquiring 20 natural food chains. In 2002, WFM entered Canada, and in 2004, the United Kingdom. grocerybusiness.ca

WHOLE HEALTH

The Goods on Whole Foods, Detroit Grocery Business: Tom, thanks for visiting the new Whole Foods Market store in Detroit on our behalf. What impressed you most about the store? Tom Quinn: Although it’s a relatively small store at only 21,000 sq.ft. with a limited selection compared with other WFMs, it’s more a “city store” type and fits with the neighbourhood. Their main advantage is that they are located on the edge of the Wayne State University campus as well as a large hospital complex, so they attract a lot of students and hospital workers. I was there around lunchtime so their prepared foods area was very busy. The store just opened on June 5th (2013) so it’s early days, but I’d say this store offers a good shopping experience and is a welcome addition to a neighbourhood that hasn’t enjoyed much grocery store selection. Tom Quinn was formerly the trade commissioner at the Consulate General of Canada in Detroit, from 1996 to 2012. He is now a principal at TQ Consulting.

Financial highlights Q2 2013 (all figures in U.S. $)

Sales per gross square foot

$991

Earnings before interest, taxes, depreciation and amortization (EBITDA)

Sales

Net income

to $3 billion

to $142 million

+13% +21% Average weekly sales per store

$725,000 Gross margin:

36.4%

up 18%

Return on invested capital

16.7%

Whole Foods Market was founded on several core values that underpin its company culture:

The first Whole Foods Market, Austin, Texas

» Sell the highest-quality natural » Serve and support local and organic products available.

and global communities.

» Satisfy, delight and nourish

» Practice and advance

» Support team member

» Create ongoing win–win

» Create wealth through profits

» Promote the health of

customers.

happiness and excellence. and growth.

grocerybusiness.ca

environmental stewardship. partnerships with suppliers. stakeholders through healthy eating education.

David Matthis (left), John Mackey at the Houston, Texas store opening, 1984

July | August 2013

WHOLE HEALTH

COMMUNITY CARE Whole Foods is pursuing an additional customer base as it

embarks on a strategy to target lower-income, food-insecure neighbourhoods – the so-called “food deserts.” WFM recently opened a 21,000-sq.ft. store in economically challenged

“What we’re trying to do in Detroit is stretch the cul-

ture, stretch the mission a little bit,” said co-CEO Walter Robb in a Huffington Post article.”

The company intends to address the issue of access to fresh,

inner-city Detroit (see “The Goods on Whole Foods, Detroit),

healthy food by opening smaller, more efficient stores. “What

South Side.

tailor its stores and assortment to a select group.

with plans for similar stores in New Orleans and Chicago’s

Prior to the Detroit store’s June opening, WFM held a ven-

sets Whole Foods apart from other grocers is its ability to

dor fair to source locally-produced products, identifying as

many as 50 to start. A community commercial kitchen will allow other food entrepreneurs to rent space to kick-start

their businesses. The company also retained a community

health and wellness educator to hold classes across the city to teach consumers about healthy food choices.

Big plans, smaller stores

Besides a planned expansion in Canada, Whole Foods Market is opening smaller stores in some U.S. urban centres with more private-label offerings and pre-packaged products to keep prices down and to appeal to more mainstream customers. We asked three retail experts how they thought this strategy would play out.

Alida Destrempe,

Ed Strapagiel,

Kantar Retail

Maureen Atkinson,

independent retail

J.C. Williams Group

consultant

Many retailers are

revamping their price

Whole Foods has

ing their pricing

health dimension

narratives or adapt-

Whole Foods will

certainly challenge

focused on the

mainstream grocers on their premium

strategies. In a highly competitive pricing

and has gone after that market aggres-

business, but I think the people who will

to shoppers that stretches beyond price.

too far down this path lest they affect their

operators in that niche.

market, retailers need to demonstrate value Whole Foods will be able to win in these

new, urban markets if it can balance mul-

tiple forms of value, for instance, heightened customer service, without sacrificing its

sively. Conventional supermarkets can’t go mainstream business, and independents

simply can’t afford a high level of advertising and promotion.

core, brand message. The company under-

Whole Foods has been quite successful in

suburban environments, and has the ability

why it shouldn’t be in Canada.

stands how to operate in both urban and

to adapt and change its merchandising as required.

July | August 2013

the U.S., and there’s no particular reason

probably get hurt the most are the smaller

I think if Whole Foods was just another

grocery store, you’d probably not give them

much of a shot at this. But they are experienced operators and know what it takes to be successful in Canada.

I don’t think introducing smaller stores in

urban markets will dilute their brand, as long as they do it well and do it wisely.

grocerybusiness.ca

WHOLE HEALTH

349 1980

First store opened in

Number of stores in 40 states and three countries (as of May 2013)

FAST FACTS

THE CO-CEOs

John Mackey

Walter Robb

THE WHOLE FOODS

DIFFERENCE As Destrempe points out, shoppers see WFM as a trusted source to shop for top-quality natural and organic products. But it’s not only the products that attract customers. “Whole Foods also entered the grocery scene with strong views on social and economic matters which have manifested in their stores,” says Destrempe. “The retailer’s go-to-market strategy is focused around its core values, and in turn, Whole Foods has built a social and emotional connection with its shoppers that sets it apart from other retailers.” “They are very specific in what they do,” notes Atkinson. “They’re very good operators and they do have a kind of following – people who love the product, who love what the store stands for.” And most of those people are more affluent than the average Jane or Joe. “I’m sure [WFM] would like to appeal to all customers, but the reality is, the people who want to pay for this kind of product, who want to really invest in this lifestyle, are different from the average grocery shopper,” says Atkinson.

grocerybusiness.ca

with a staff of

20 ACQUISITIONS

Sales for fiscal 2012

$11.7 BILLION Total employees:

73,000

th largest food and drug store in the U.S.

2,400 Natural and organic products under Whole Foods Market; 365 Everyday Value and Whole Catch brands

LOBLAW FIGHTS BACK: IN A NUTSHELL

Loblaw is piloting a new health and wellness/natural foods franchised concept called NUTSHELL live life well. The test store will open this fall on King Street West in downtown Toronto, says Julija Hunter, vice-president, public relations, Loblaw Cos. Ltd. She describes it as “a new version of a health store.” According to Hunter, the small-format store will feature the following: »» A community-based interactive orientation. »» A variety of fresh, natural and healthy food and living ideas, all at great value. »» Wholesome, convenient ready-to-eat foods. »» A grocery offering with integrated natural options, and a broad vitamin and supplement assortment. »» Professional in-store health and wellness service and solutions. »» A pharmacy that balances traditional services, prescriptions and OTC, with prevention and support, and health and beauty products (core assortment with focus on natural skin care). Hunter didn’t disclose the date of the official opening, but the store already has a Facebook page and a Twitter account (@nutshellonking).

July | August 2013

WHOLE HEALTH

HEALTHY HELEN SHERRARD president, Canadian Health Food Association

CHFA EAST 2012 FAST FACTS

2,900

ATTENDEES

650

BOOTHS

75,000

net sq.ft* OF FLOOR SPACE

* In 2014, CHFA East moves to the roomier South Building at the Metro Toronto Convention Centre, which will open up space for more exhibitors

July | August 2013

PROSPECTS As Canadians’ interest in healthy living continues to grow, Helen Sherrard, president of the Canadian Health Food Association (CHFA), provides insights into this dynamic category. Grocery Business: The natural health products (NHP) category has grown quickly. What are the key drivers? Helen Sherrard: It’s difficult to pinpoint one key factor for the increase in the NHP category. We know that 70 per cent of Canadians use these products on a regular basis, and the industry contributes over $3 billion annually to the Canadian economy. As Canadians become more health conscious, it seems that NHPs are being used for a number of reasons, such as the prevention, treatment or reduction of an illness, or the maintenance of good health. GB: How does Health Canada define a natural health product? HS: Health Canada defines NHPs as “naturally occurring substances that are used to restore or maintain good health.” They can be made from plants, animals, micro-organisms and marine sources, and can include vitamins and minerals, herbal remedies, homeopathic

medicines, traditional medicines, probiotics, and others, like amino acids. GB: What is a Natural Product Number? HS: What many Canadians may not know is that once an NHP has been assessed by Health Canada, it receives an eight-digit Natural Product Number (NPN) or a Homeopathic Medicine Number (DIN-HM). By looking for one of these numbers on the label, consumers can be confident that the product has not only been reviewed by Health Canada, but that it is safe, effective, and of high quality. GB: Are there any restrictions on how a retailer can merchandise and promote products with an NPN number in-store? HS: The Natural Health Product Regulations (NHPR) define detailed requirements for labelling, merchandising and promoting NHPs. Information on labels may be printed only as per the terms of the product licence. What this means is that, to help consumers make appropriate and informed choices about a particular product, all advertising of NHPs must clearly communicate the intended use of the product, corresponding to the licence issued by Health Canada. grocerybusiness.ca

WHOLE HEALTH

Go East in October The CHFA East conference will be held at the Metro Toronto Convention Centre October 3-4, 2013 with the trade show portion taking place October 5 and 6 at the same venue. For more information, visit chfa.ca.

$3 BILLION

estimated contribution to the Canadian economy directly from the NHP industry

45%

of Canadians use an NHP on a daily basis

80% 70% of NHP users indicate that these products were “very or somewhat important” to their families

of Canadians use NHPs on a regular basis

10,650 estimated number of establishments directly involved with the sale of natural and organic health products 34,000 estimated number of individuals directly employed by the industry

79% of NHP users believe that natural health products are safe

85% of NHP users use these products because they want to help maintain and improve their health

70% of Canadian NHP users support developing a new act for NHPs in Canada

ION $2.5 BfoILodLsales to

organic consumers Canadian annually

GB: From a Health Canada perspective, are organic products treated differently from natural health products? HS: Organic products and natural health products each have separate regulatory acts under Health Canada: the Organic Products Regulations and the Natural Health Product Regulations, respectively. Certifying a product as organic does not make it a natural health product, and vice-versa. However, both of these types of products are thoroughly and strictly regulated to provide the Canadian consumer with the confidence that purchasing a product with an NPN or an Organic Certification means that it’s of the highest quality. grocerybusiness.ca

About CHFA

GB: CHFA holds two conferences a year, both of which have grown rapidly. What do you think is driving that growth? HS: Our trade shows are a reflection of the industry as a whole, and they will continue to grow as it does. Canadians’ interest in a naturally healthy lifestyle is growing, and as a result, manufacturers and retailers continue to evolve in order to provide the highest-quality products and the latest innovation.

The Canadian Health Food Association is Canada’s largest trade association dedicated to natural health and organic products. Formed in 1964 from a grassroots community of health food pioneers, CHFA now represents more than 1,000 member businesses across Canada, including manufacturers, retailers, wholesalers, distributors, and importers of natural and organic products.

July | August 2013

WHOLE HEALTH

Catering to Food Intolerances With more consumers complaining about food intolerances, thereâ&#x20AC;&#x2122;s an opportunity for retailers to offer naturopathic wellness services

How widespread are food intolerances thought to be?

What is the difference between a food allergy and food intolerance?

than 20 per cent of the population. The two most

that an individual has on ingestion, inhalation or

Estimates vary widely from 2 per cent to more

common causes of food intolerance are lactose and gluten (wheat). Food intolerances may be

due to several things such as genetics, overconsumption of particular foods, environmental

A food allergy is typically an immediate reaction contact of a substance. It can result in severe

symptoms such as difficulty breathing, swelling of the lips and throat and may be life-threatening.

manifest from a few hours or up to several days

difficulty managing the inflammation caused by

eczema, joint pain, low energy, migraines,

food intolerances.

30%

of consumers say they always or usually purchase grocery products labelled for improving specific health conditions

42% say food allergy and sensitivity is a consideration

Diabetes 58% Overweight

57%

High cholesterol

56%

Digestive disorders

48%

Cancer 46% Heart or cardiovascular

42%

Food allergy/sensitivity

42%

Source: The Hartman Group, 2010

Dr. Mubina Jiwa Director - Essence of Health, Chief Naturopathic Doctor Gemoscan Canada, Inc.; Assistant Professor, Canadian College of Naturopathic Medicine

Food intolerances, on the other hand, tend to

factors, stress, etc. As we age and our health

concerns and stress increase, the body has more

Consumers who report using food as a preventative tool for the following conditions:

after ingesting a food. Symptoms may vary but indigestion, bloating, and other digestive concerns are common.

Is there an opportunity for food retailers to tap in to this growing opportunity? Food intolerance management is one of a

growing number of naturopathic wellness

services that can be offered outside of a medical office. Many retailers and pharmacies see a

Medically supervised Hemocode System is among the options available for food intolerance testing and management. It is the first and only program to be offered to consumers as a system, supervised by naturopaths, and commercialized for the food, drug and mass retail channels. Itâ&#x20AC;&#x2122;s available at Rexall Drugstores, select IDA and Guardian Drug Stores across Canada, and the Hemocode System has been

considerable opportunity for incorporating these

successfully tested at grocery as well.

wellness offerings within the store.

For more information visit Hemocode.com

services into an expanded suite of health and

By 2017, the global market for all food allergy and food intolerance products will surpass $26.5. billion. A 2007 USFDA report estimated 28% of Americans have a food intolerance. According to 2012 Statistics Canada figures, 52.5% of Canadian adults, and 21.8% of youth (12-17), are estimated to be overweight or obese; food intolerance has been linked to obesity. A recent survey of health-care consumers confirms that, while Canadians prefer conventional medicine, one in four use alternative methods at times.

July | August 2013

grocerybusiness.ca

WHOLE HEALTH

THE MILKY

WAY What does being lactose intolerant mean? Lactose is a type of sugar found in milk

products. In order to digest lactose properly,

Is lactose intolerance growing among children and adults? increase of adults with lactose intolerance due

What types of products are these consumers looking for?

with celiac disease. Competition and demand

looking for non-

In recent years, there has been a steady

to the sudden increase of people diagnosed

Consumers are

have bred quality and innovation in foods

dairy “milks” and

for sensitive diets and as a result, sensitive

diet products – gluten free, allergen-free and

intolerance-friendly – are big business today.

The global market for sensitive diet products is estimated to be $26 billion by 2017.

the body produces an enzyme called lactase.

How many people are lactose intolerant?

has stopped producing adequate amounts of

world’s population is lactose intolerant, mean-

In people with lactose intolerance, the body

Some studies estimate 75 per cent of the

lactase, causing symptoms such as bloating

ing the majority of humans lack the enzymes

and nausea.

43% of consumers in the lactose-free category are looking for a dairy-free alternative

products ranging

from cheese to ice

cream to yogurt, so mainstream grocers should consider growing their lactose-free offerings.

Jamie Schapiro is Director of Marketing, Galaxy Nutritional Foods, Inc.

needed to break down lactose.

34539D_CC_GrocBus_Ad_Layout 1 13-04-23 8:29 AM Page 1

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A participant of Heart & Stroke Foundation of Canada’s Health CheckTM Program

For more recipe ideas visit the California Cling Peach Board at:

www.calclingpeach.ca

WHOLE HEALTH

GOING NUTS Canadians are turning to the nut aisle for healthy snack options

By Noelle Stapinsky

AS MORE CANADIANS ASPIRE to consume healthier foods, nuts and nut products are on a sharp upswing. Packed with fibre, protein, vitamins and minerals, nuts have quickly become a snacking favourite across the country. Patrick Archer, president of the American Peanut Council, says the growth of the peanut category in North America is primarily due to the health and nutrition message that has caught consumer attention. “Some nutritional studies have found that the heart health ben-

Smooth Operators It’s not just about crunchy or smooth anymore; peanut butter is now being infused with sweet and savoury ingredients. Cranberry, cinnamon and honey are among the flavours being added to the traditional breakfast spread to create bold new flavour profiles. Some companies are even producing indulgent mixes by adding chocolate. “There are also savoury products out there like peanut butter hummus,” says the American Peanut Council’s Patrick Archer. Peanut butter is also making its way into household dinners as a sauté sauce to create Thai-inspired dishes, and as a dip to encourage children to eat their fruits and vegetables.

July | August 2013

efits of consuming nut products are very similar to those of olive oil,” he says. And for many consumers, nuts are more than just a snack – they’re now a popular item being added to salads, cereal, and some dinner entrees. “This category has been growing for many years,” says Joseph Milando, vice-president of sales, Eastern Canada, for Trophy Foods Inc. “Almonds have skyrocketed. Flaxseed has exploded as more people are adding them to yogurt, cereal, and in baking applications – it’s in the double digits. More people are looking at labels, and with nuts they see all the good stuff they’re putting into their bodies.” This demand is driving innovation in the category as more companies expand their offerings with bold new flavour profiles, single-serve options and more convenient resealable package designs. Unique seasonings such as sea salt and black pepper, jalapeno, and mesquite BBQ are making waves. “These new flavours are really driving the category,” says Milando. He notes that Trophy Foods recently launched a line of kettle-cooked peanuts. “It’s a unique process of how the peanuts are fried, which makes them taste like a potato chip.” In the in-shell nut category, pistachios have recently gained a lot of exposure across North

grocerybusiness.ca

WHOLE HEALTH

America – a resurgence that was driven mainly by the entry of Paramount Farms’ Wonderful Pistachios and its robust advertising campaign, Get Crackin’, which featured fun and whimsical commercial spots. Marc Seguin, vice-president of marketing for Paramount Farms, explains how the company maximized in-store sales. “It’s all about displays, displays, displays. Pistachios are often an impulse purchase, so it’s important to ensure consumers have multiple opportunities to grab a pack as they shop.” Half-pallet displays allow retailers to utilize less floor space and create more points of interruption throughout the store. “And end-cap displays are another great way to get visuals on a product,” says Milando. Strategically placing single-serve packages close to checkout areas can also create additional opportunities to capture those last-minute impulse snack purchases. With such an in-demand, versatile product, the sales opportunities for retailers exist throughout the store and in almost every department. And while nut sales used to spike during the holidays, consumers in search of healthy alternatives are driving up sales throughout the year.

Merchandising

idea

Many cuisines use nuts as a cooking ingredient. Consider merchandising nuts in the ethnic aisle or in the produce department to build basket size.

grocerybusiness.ca

TOP SELLERS

$ Sales

$ Cat Share

$ Vol % Chg

SNACKING FRUITS NUTS & SEEDS

496,188,320

100.0

PEANUTS SHELLED

72,017,514

14.5

NUTS IN SHELL

13,076,631

2.6

-3

SNACKING FRUITS NUTS & MIX

75,975,374

15.3

MIXED NUTS

44,543,149

9.0

CASHEWS

86,130,102 17.4

PISTACHIOS

74,298,365 15.0

ALMONDS

65,226,645 13.1

SUNFLOWER & PUMPKIN SEEDS

29,508,846

5.9

OTHER SNACKING FRUITS NUTS

35,411,694

7.1

-14 52 wks to June 1, 2013

GROWTH FOR CASHEWS

+21 +27 ($ VOL%)

(KG VOL %)

NUTS ABOUT PEANUTS

According to Leger Marketing research conducted by the American Peanut Council:

49% 94% of Canadians consume peanuts on a weekly basis

of Canadians have peanuts or peanut butter in their household

On a per-capita basis, Canadians consume more peanuts than Americans

July | August 2013

it figures > The

Healthy Heart 1 in 5

consumers are actively reducing their intake of artificial sweeteners

Takeaway Consider sweetener alternatives – such as honey and raw sugar – to appeal to the consumer shift to more natural alternatives.

45% 40

July | August 2013

80%

of Canadians are trying to minimize future health problems with diet and exercise being the top two causes of behavioural changes

Takeaway Consider how you connect your brand to recipes, diet plans, exercise programs or activities as among the ways to help consumers achieve their goal.

of consumers want affordable, healthy options Takeaway Consumers are demanding and expect healthier products that provide value for their wallets and waistlines.

grocerybusiness.ca

29% 35%

of Canadians are tackling weight loss with a normal diet of smaller portions

of Canadian households report having a food allergy Top 3 among allergy households:

38% Dairy 14% Gluten

Takeaway When it comes to innovation, recipes or general product consumption, consider the consumer definition of portion control.

29% When it comes to seeking out health benefits from food and snacks, heart health (29%) and weight management (27%) top the list Takeaway When you’re promoting health benefits be sure to link to these key motivators. grocerybusiness.ca

19% Shellfish

Takeaway Ensure your innovation plans and store layout don’t alienate these consumers.

Carman Allison is director of consumer insights for The Nielsen Company in Canada and is responsible for creating thought leadership reports and insights for CPG manufacturers and retailers.

A L L S TAT S C O U RT E S Y: N I E L S E N

Carman Allison

July | August 2013

“ We know our advertising in GROCERY BUSINESS MAGAZINE is effective” States, Sharon Baingan, National Sales Director, Organika Inc. “Our ad looked great and we were thrilled to have received calls from retail buyers who had seen our advertisement for our recently launched, Organic Coconut Palm Sugar and Coconut Vinegar products, in Grocery Business”.

Organika has evolved over 20 years to a world class manufacturer and distributor of superior health products selling to retail food stores around the globe. For more information regarding Organika, go to www.organika.com or call 604-277-3302. For more information on Grocery Business, go to www.grocerybusiness.ca or call 416-817-5278.

THE POWER OF IN-STORE MARKETING POPAI’s 2012 Shopper Engagement Study shows more decisions are being made in-store than ever before The path to purchase is considerably different for today’s shoppers than it was only a few years ago. Consumers are better informed about purchasing decisions thanks to smartphones, shopping apps and mobile coupons. Yet the 2012 Shopper Engagement Study, conducted by POPAI, The Global Association for Marketing at Retail, found it all comes down to in-store marketing. The study found that shoppers are making an overwhelming number of purchasing decisions in-store. In fact, the in-store decision rate climbed to an alltime high of 76 per cent in 2012, from 70 per cent in 1995. According to POPAI, an important part of the marketing mix is the use of materials and devices that stimulate sales at the point of purchase. “Often the decision-making process of shoppers does not occur until they actually see a product in the store. Therefore, the way a product is displayed and is supported by in-store marketing materials can often be instrumental in leveraging sales,” the study says. POPAI’s in-store decision rate is comprised of three key components: generally planned purchases, brand substitution, and unplanned purchases. Together, these determine the true number of decisions being made at the shelf. grocerybusiness.ca

SUPERMARKET BUYING HABITS

The in-store decision rate for today’s shopper

55% UNPLANNED PURCHASE

24%

SPECIFICALLY PLANNED

15%

GENERALLY PLANNED

BRAND SWITCH

July | August 2013

WHO ARE YOUR SHOPPERS? TIME STRESSED

22% 26% 23% 29%

A consumer who is under time pressure, is always in a hurry, and has perceived budgetary constraints. This group is not low income.

EXPLORERS A shopper who enjoys discovering new products, browsing the store in general and getting inspiration for meals while shopping.

TRIP PLANNERS A consumer whose goal is to get the shopping trip over with and executed according to plan.

BARGAIN HUNTERS A consumer who is willing to shop around for the lowest price.

July | August 2013

grocerybusiness.ca

13%

ALL EYES ON THE DISPLAY

A look at the Fixation Rates of shoppers

12%

EYE FIXATIONS MADE ON IN-STORE DISPLAYS

10%

KING OF THE AISLE

Display types dominating in-store

51%

POWER WING

35%

44%

IN LINE

3% 2%

END CAPS

34% FLOOR STANDS

FLOORSTAND

ENDCAP

POWERWING/ INLINE/ SIDEKICK GONDOLA

LOCATION, LOCATION, LOCATION

A look at where displays are popping up in the supermarket

THE RATE OF IN-STORE DECISION MAKING HAS REACHED AN ALL TIME HIGH

66%

70%

76%

42% 28%

23% 7%

1986

grocerybusiness.ca

1995

2012

END OF AISLE

IN AISLE

PERIMETER

FRONT END

July | August 2013

Custom Publishing with a fresh take quality content + award-winning design

OUR TURNKEY SERVICES INCLUDE: • Professionally written and edited content • Custom photography • Award winning graphic design • Account management • Top quality printing • Distribution • Promotion

If the medium is the message and the brand message is quality, then choose Grocery Business Publishing

CONTACT:

Kevin Smith 416-569-5005

Karen James 416- 561-4744

Dan Bordun 416-817-5278

kevinsmith@grocerybusiness.ca

karenjames@grocerybusiness.ca

danbordun@grocerybusiness.ca

WE’RE HONOURED

to be chosen as a Grand Prix Finalist!

We’re pleased to announce that our Burnbrae Farms™ Nestlaid™ eggs are a new product ﬁnalist in the Canadian Grand Prix Awards. These eggs come from hens raised in small social groups that are free to perch and lay their eggs in a nesting area in an enriched colony house environment, and are fed a diet of whole grains and other wholesome ingredients. And like all of our products, it represents our ongoing commitment to innovation and nutrition to meet the evolving

lifestyles and dietary requirements # of all Canadians. We are also proud to have been selected as a past winner of 13 Grand Prix Awards! From all of us at Burnbrae Farms, we sincerely thank the Canadian Food Industry Judges for their appreciation.

For more information, contact us at: 1 800 666-5979 or burnbraefarms.com

CONGRATULATIONS! TO THE RECIPIENTS OF THE 20TH ANNUAL CANADIAN GRAND PRIX NEW PRODUCT AWARDS

The Canadian Grand Prix New Product Awards celebrates innovation in 26 food, non-food and private-label categories. A 32-member panel of industry experts judged entries on five key criteria: uniqueness and innovation, product characteristics, presentation and packaging, overall consumer value, and consumer acceptance. Winners received their awards at the Grand Prix gala evening on June 5, 2013. Founded two decades ago, the Grand Prix program encourages new product development and innovation, which are vital to the continued growth of Canadaâ&#x20AC;&#x2122;s consumer products and grocery retail industries. Presenting, the Canadian Grand Prix New Product Award winners for products launched in 2012

grocerybusiness.ca

July | August 2013

SPECIAL AWARDS All Canadian Award

Adam Cameron

20TH ANNUAL

CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Canadian Grand Prix Healthy Innovation New Product Award

Weston Bakery Ltd.

Bill Vanderkooi

Country Harvest 100% Whole Grain Bread

Vitala Foods

Vita-D Sunshine Eggs

Innovation and Originality Innovative Packaging Consumer Acceptance

Irena Khan

Procter & Gamble Inc. Tide Pods

Gerry Doutre

Ultima Foods Inc.

iögo Nano – Drinkable Yogurt

July | August 2013

grocerybusiness.ca

FOOD

Brian Kerr, Gilles Deschênes

20TH ANNUAL

CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Kraft Canada Inc. Nabob Bold

Melodie Farina, Tom Hare

Dare Foods Limited RealFruit Gummies

Richard Vann, Vincent Uy, Kenneth Co

7000 Foods

Pulo Philippine Cuisine

Julie Bullard, Frédérique Delagrave, Martin Valiquette, Simon Brisebois

Liberté

Liberté Froúto Greek Yogurt

Adam Cameron

Weston Bakery Ltd.

Country Harvest 100% Whole Grain Bread grocerybusiness.ca

July | August 2013

FOOD

Bill Vanderkooi

20TH ANNUAL

CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Ihab Leheta

Vitala Foods

Vita-D Sunshine Eggs

Garden Protein International gardein

Old Dutch Foods Ltd.

Northern Choice Chickpea Tortilla Chips

Julie Néron, Andrée Guimont, Lyne Chayer, Pierre Rivard

Best Brands Ltd.

St-Hubert Chicken Broths (900mL)

Peter Joe

Sunrise Soya Foods

Sunrise Super Squeezies Dessert Tubes

July | August 2013

Randal Lus

Happy Planet Foods Inc. Happy Planet Fresh Soup

grocerybusiness.ca

NON-FOOD

20TH ANNUAL

CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Irena Khan, Jason Adlam

Procter & Gamble Inc. Tampax Radiant Tampons Tide Pods

Michael Watt

Baby Gourmet Foods Inc. Squoosh

Corrine Chan, Deanna Fleming

DLM Foods Canada Corp.

Saba Nabi

Glaxosmithkline Consumer Healthcare Inc. TUMS freshers antacid

grocerybusiness.ca

Milk-Bone Healthy Favorites

David Jacobs

S.C. Johnson and Son, Limited Ziploc Brand Perfect Portions OFF! Clip-on

July | August 2013

PRIVATE LABEL

Dave Pullar

20TH ANNUAL

CANADIAN GRAND PRIX NEW PRODUCT AWARDS

Canada Safeway Ltd. Edwards Coffee, 326 g Debi Lilly Savoy Candle

Seanna Rishor

Safeway Tuna, 170 g

Loblaw Brand Limited

PC “Free From” Angus Beef Burgers

Marie-France Gibson, Jason Knights

Metro Richelieu Inc.

Fresh 2 Go Toscana Focaccia

Irresistibles Dark Chocolate Covered Caramels with Sea Salt

Deleo de Leonardis

Sobeys Inc.

Sensations by Compliments Extra Virgin Olive Oil 3L

July | August 2013

grocerybusiness.ca

Shopper Marketing

SOAKING UP

SALES The challenge: How to create consumer interest and drive sales in a low-engagement category.

The solution: A cross promotion that integrated television show sponsorship, consumer contests, social media and a retail point-of-sale program.

For the third consecutive year, Kruger Products’ SpongeTowels was the official paper towels of Food Network Canada’s Top Chef Canada. Chefs used the product on the set so that viewers could see it in action, and television ads ran during the program.

Then we had our in-store point-of-sale program, which brought the Top Chef property into the retail environment and another touchpoint for consumers.

Grocery Business spoke with Wendy Mommersteeg, category director – paper towels, Kruger Products L.P., to learn how the various aspects of the cross promotion tied together to drive sales at retail.

WM: Because of the popularity of the show, we were able to leverage that property in-store through flyer activity, on- and off-shelf displays, and consumer interaction in the store. SpongeTowels had more than one million packages featuring on-pack communication of its sponsorship. Our POS material encouraged consumers to enter the contest. That got them more involved in the property, and the ultimate outcome was to drive purchases of SpongeTowels.

Grocery Business: What were the components of the promotion? Wendy Mommersteeg: Besides the television show itself, we reached the audience of consumers who were watching Top Chef Canada online. Before each episode ran, viewers would see the SpongeTowels commercials. There was also a unique aspirational consumer contest. The prize was a cooking demonstration and dinner with the Season 2 winner, Carl Heinrich, in his restaurant in Toronto. During the television show, consumers could visit our micro-site and vote for the person they thought would continue to win. There were also weekly prizes. grocerybusiness.ca

GB: What comprised the in-store portion and how did that help drive sales?

GB: How can grocers leverage the promotion? WM: Retailers are looking for programs that add excitement and engagement to low engagement categories. You don’t always have to always offer price reductions. If you have strong properties and sponsorships, the off-shelf display really works well.

Besides in-store POS that is available for all retailers, there is an opportunity for them to customize a program – to create their own Top Chef program in the store environment. For example, buy two SpongeTowels and get entered in an in-store contest. Retailers could leverage that through their loyalty card. GB: Three years into the sponsorship, how would you summarize the results? WM: It’s a great partnership for us, and great exposure. Sponsorships have to work for both parties. It has to be a win for Top Chef, and it has to be a win for SpongeTowels, so I think that’s why we’ve been successful. It’s a unique way to get our absorbency message out. Our tagline is: “Nothing absorbs like it.” Consumers love cooking shows. They like to see what the chefs are cooking, and what products they’re using. It’s an ideal association for us.

Wendy Mommersteeg, category director – paper towels, Kruger Products L.P.

July | August 2013

Bricks and Clicks

TAKIN’ IT TO THE STREETS By Sally Praskey

AS THE 21ST CENTURY DAWNED, home delivery of groceries was booming as both pureplay and bricks-and-clicks retailers jumped on the bandwagon. But in the wake of the spectacular failures of startups like Webvan and Kozmo in the 2001 dot-com bust, home delivery stalled as retailers struggled to find ways to make the last mile – the delivery from the warehouse or store to the customer’s door – profitable. But now, after a 12-year lull, the delivery of groceries and other online sourced products is back on the scene in a major way. Chalk it up to young, tech-savvy consumers who don’t own a vehicle, aging baby boomers who dislike walking large stores, and smart phone apps that make ordering easy. Not to mention there’s a battle brewing for domination among the behemoths – the pure online players like Amazon and now Google, versus the bricks-and-mortar clout of Walmart. As a result, new – or at least revamped – models for grocery delivery services continue to emerge (see “The Evolution of E-commerce,” Grocery Business, April/May, 2012). Essentially, if you have a modem, grocers have a delivery model for you.

THINKING INSIDE THE BOX

July | August 2013

Customers use their smartphones to order products

The last mile: This last leg of the

supply chain is often less efficient, comprising up to 28 per cent of the total cost to move goods. This has become known as the “last mile problem.” The last mile problem can also include the challenge of making deliveries in urban areas where retail stores, restaurants, and other merchants in a central business district, often contribute to congestion and safety problems. – Wikipedia

One of the biggest challenges with online shopping is missed deliveries, which are costly and inconvenient. That’s where drop boxes come in. AMAZON is testing secured “Lockers” in select 7-Eleven, Staples and other retail locations in several U.S. cities for products it sells.

SHOPBOX, based in the U.K., places secure containers outside customers’ homes. Perishables: Yes

BUFFERBOX is a Canadian-developed, self-serve parcel pick-up box for any online order. Situated in GO Transit stations, 7-Elevens and Sobeys stores in the Greater Toronto Area. Bought by Google in 2012.

WALMART is planning to test in-store delivery lockers in a handful of its U.S. stores for customers who elect to use the “ship to store” option.

grocerybusiness.ca

SAME-DAY SERVICE

CLICK & COLLECT

As retailers seek a competitive edge, several are turning to same-day delivery service.

AMAZONFRESH, through its Seattle Spotlight

program, delivers ready-to-eat meals from local

An increasingly popular option for

restaurants, picking up restaurant orders daily and

both grocery retailers and consum-

merging them with each customer’s grocery

ers, particularly in Europe, Australia,

or general merchandise order. Recently expanded

and the U.S., is the “click and collect”

AmazonFresh offering to Los Angeles.

drive-through model. Pioneered by

Perishables: Yes

French grocery retailer Groupe

Auchan SA more than a decade ago,

GOOGLE, The Internet search leader is a recent

mile by having customers pick up

Shopping Express provides same-day delivery of

click and collect eliminates the last

entrant in the grocery delivery game. Google

their online grocery order at either

food and other products bought online to a test

the store or a convenient location.

group of shoppers in San Francisco, and even

contracts-out deliveries to couriers, who drive

AMAZON offers Collect+ in the U.K.;

Google vans. Participating merchants – including

customers can arrange to have

Target Inc. – sell items through a central website

packages delivered to pickup points,

and pay a commission to cover delivery costs.

such as convenience stores, news-

INSTACART inventories products from Trader Joe’s,

stands, and gas stations.

PEAPOD, a wholly-owned subsidiary of

around five U.S. cities – in effect,

the retailer’s Stop & Shop and Giant

for the final leg of the relay.

Royal Ahold, provides online service for supermarket chains. The Peapod

Pickup service allows customers to

order groceries through peapod.com

passing the baton to the consumer Perishables: Yes, by packing frozen foods in individual freezer bags.

and pick them up at a Stop & Shop

TESCO now offers free Click & Collect

100 virtual grocery stores at com-

than 150 of its stores in the U.K. Also

store. Last fall, it rolled out more than muter rail stations in several U.S. cities. This year, virtual store technology

features digital billboards of larger-

than-life grocery aisles positioned in

RELAY FOODS sources foods from

local stores, restaurants and farms for pickup at drop locations scattered

grocerybusiness.ca

Instacart offers a yearly subscription service, called Express, that waives individual delivery fees. Perishables: Yes

Complements the chain’s existing models – “pay

only to fulfill online grocery orders. Perishables: Yes

store pick-up.

Perishables: Yes

as one hour. And, like Amazon’s Prime Service,

operates several “dark stores,” used

high-tech Peapod truck travelling of summer.

shoppers to buy and deliver the groceries in as little

WALMART’S “Walmart To Go” pilots same-day

WHOLE FOODS is said to be planning

through each market through the end

Customers order online, and Instacart hires personal

Groceries next-day service in more

community recreation centres, on

coffee sleeves at local cafes, and on a

Safeway, Whole Foods and Costco in San Francisco.

an online shopping service with

delivery for selected products in some U.S. markets. with cash” at store (for an online order), and shop online and pick up same day. On a more limited basis, Walmart has been testing the delivery of

perishables to certain consumers in the San Jose/ San Francisco area.

ZIPMENTS is a crowd-sourced

IN CONCLUSION…

New York City. Allows anyone over

of these various grocery delivery models, the

delivery network servicing retailers in age 18 with a vehicle, a text-enabled phone, and a PayPal account to bid on delivery services.

While the jury is still out on the financial viability concept is undoubtedly here to stay as retailers

pursue new ways to connect with the changing

lifestyles and demographics of their marketplaces.

July | August 2013

Marketing

BRANDSPARK SURVEYS CANADIAN MARKETERS

Innovative products, new industry trends have marketers feeling optimistic This year, marketers will focus on digital marketing and launching innovative products, according to the 8th annual BrandSpark Canadian Marketers’ Survey. “We see that marketers are consistently open to new strategies and tactics, but there is a lag between when channels are considered ‘hot’ and when marketers are able to design and implement a coherent strategy incorporating, the channel,” says Philip Scrutton, director, consumer insights.

THE SURVEY

“One in four marketers cited email database marketing as the biggest marketing trend of the year (ahead of other responses), and 69 per cent either will or ‘probably will’ implement a mobile strategy this year, but only 15 per cent already had a strategy in place,” Scrutton says. “However, based on these results we expect mobile marketing growth to live up to industry expectations in the coming year.”

The 8th Annual BrandSpark Canadian Marketers’ Survey was conducted online in March and April 2013 in collaboration with lead partner the Canadian Marketing Association and supporting partner the Mobile Marketing Association. BrandSpark.com

Consumer insight brought to you by:

WHAT DELIVERS THE BEST ROI?

SPENDING INTENT RANKED BY % INCREASE FOR UPCOMING YEAR

AS PERCEIVED BY MARKETERS SOCIAL MARKETING

45% 35%

MOBILE MARKETING

33%

CRM/DATABASE ADVERTISING ONLINE DISPLAY ADVERTISING

29%

PROMOTIONS /ACTIVATIONS

29% 26%

PAID SEARCH MARKETING AUTOMATION IN-STORE / POS DIRECT MAIL

July | August 2013

26% vs. 10% EMAIL /DATABASE MARKETING

SHOPPER MARKETING

19% 15% 14%

grocerybusiness.ca

Chipping In T he 79th Annual Food & Allied Industries Golf Tournament: June 7, 2013

Forge Francella presents the cheque to Michelle Scott of The Grocery Foundation

Over 400 golfers, playing on four different courses, enjoyed a day on the links to raise $10,000 for The Grocery Foundation. Thanks to everyone who participated!

Food and Allied Golf Committee Left to right: Mike Furgiuele, Forge Francella, Michele McMillan, Mike Marinangeli, Ray Ibsen, Peter Davies, Christine Tos, Angelo Raso, Kevin Smith, Jim Hunter, Rory Lesperance Missing: Grant Campbell, Doug Cussons, Dave Spry

grocerybusiness.ca

July | August 2013

Shelf Life

DRESSING FOR

SUCCESS Salad dressings are the produce department’s new best friend as Canadians go beyond just topping their greens. By Noelle Stapinsky

It’s the Flavour of the Month Encourage consumer trial by displaying and sampling a unique salad dressing flavour every month.

In today’s market, Canadians are more fresh obsessed than ever. They certainly love their salads, which are the sixth-most-purchased meal item out of home. But as more shoppers embark on a quest to eliminate processed foods from their diets and consume more fresh foods, they’re scouring the produce section for new flavourful ideas. According to Anne Farragher of Kraft Canada, consumers are evolving to a more holistic approach to health, and the desire to eat more fresh and natural food products is growing. And while health-conscious options are top of mind, Canadian consumers still want bold and zesty flavour profiles. Kraft recently launched its Fruit and Veg

WHY THE SURGE IN SALAD DRESSINGS? hh

Health and wellness trend

Convenience

Increase in salad consumption

Need for meal flavour enhancement

July | August 2013

salad-dressing line, a puree product that boasts natural flavour and colour at only 20 to 30 calories per serving. But Canadians are moving beyond just drizzling these saucy solutions atop a bed of greens; many are looking to healthy salad-dressing options to pour over cooked vegetables, as a dip when munching on a raw veggie snack, or as a marinade option for meat. Dressings are even making their way into sandwiches and wraps. With flavours such as Berry Balsamic, Garlic and Lime, and Roasted Cauliflower, Farragher says, “We expect the new Fruit and Veg line to reduce the need for homemade dressings. There are alternative ideas on the side panel of the bottle to encourage cross-category purchases.”

WHAT CONSUMERS WANT hh

Fresh and natural ingredients in their salad-dressing choices.

Calorie and salt reduction with no corresponding loss in flavour.

Bold, bright and refreshing flavours.

Convenience that also extends to the packaging, which should cater to the evolution of single-person households.

DRESSING UP DEPARTMENTS TO DRIVE SALES hh

Creative displays are critical, and the most efficient in-store support vehicle.

Display bold and colourful signage.

Since salad dressings are often used as marinades, cross-merchandise them in the meat and seafood department to increase basket size.

grocerybusiness.ca

Shelf Life FLAVOURED COOKING OILS POUR ON THE PROFITS

+54%

Create some buzz in the produce section by cross-merchandising veggies with veggie dips or refrigerated dressings, and fruits with fun fruity-flavoured dips and dressings. “That is the secret to success,” says Marzetti’s Cathy Antinozzi. “With every dip or dressing being purchased, a fruit or vegetable is purchased, accounting for two profit margin opportunities.”

Larger signage and more disruptive displays in the produce area can also encourage consumers to spend more time in the section and buy more ingredients.

Kraft’s Anne Farragher advises grocers to “consider adding secondary shelving of shelf-stable salad dressing in the produce section to drive basket size.”

$ Sales

$ Sales % Chg vs Yr Ago

Unit Volume

Unit Vol % Chg vs Yr Ago

SEASONINGS & SALAD TOPPINGS

$123,957,680

30,194,741

SALAD DRESSING - DRY

$2,812,078

2,010,622

-4

SALAD DRESSING - POURABLE

$245,087,594

87,110,084

SHELF STABLE

$183,154,215

72,648,511

REFRIGERATED

$61,933,379

14,461,573

SALAD DRESSING TYPE - CREAMY

$138,923,613

46,931,044

SALAD DRESSING TYPE - OIL & VINEGAR

$63,668,586

23,519,686

-1

SALAD DRESSING TYPE - RED & SWEET

$25,177,746

10,538,788

OTHER TYPES SALAD DRESSING

$17,317,649

6,120,565

MAYONNAISE & SPOONABLE SALAD DRESSING

$211,860,896

50,646,704

MAYONNAISE - LIGHT

$43,603,452

9,825,813

MAYONNAISE - REGULAR

$91,148,797

21,546,285

SPOONABLE SALAD DRESSING - LIGHT

$24,312,927

-6

6,210,284

-7

SPOONABLE SALAD DRESSING - REGULAR

$52,795,720

13,064,322

COOKING OILS

$309,763,568

51,536,600

SALAD & COOKING OILS

$153,092,212

27,877,358

OLIVE OILS

$143,435,722

-3

21,591,790

SESAME OILS

$4,405,295

1,042,843

FLAVOURED COOKING OILS

$8,830,339

1,024,609

COOKING SPRAYS

$27,677,166

6,609,288

According to a recent study by Knowledge Networks-PDI: Sampling programs drove a 475% sales lift on the day of the event. Of those who sampled the product 11% were likely to purchase it again during a 20-week period.

52 weeks ending 12/12

And as Canada’s cultural demographic continues to change, ethnic flavour profiles are also on the rise. To answer such demand, new and exciting salad-dressing flavours have made their way into the retail scene. There are now dressings featuring mango and jalapeno, and Asian-inspired sesame and ginger. Even “superfruits” such as pomegranates, acai berries and blueberries are packing a punch in vinaigrettes. In the produce department, refrigerated dressings are winning the Canadian grocerybusiness.ca

consumer’s attention. According to Nielsen’s Total Pourable Salad Dressings data, shelfstable dressings are declining (-8 per cent), and refrigerated dressings are up by 11 per cent. “This growth is coming from pourable dressings as consumers are becoming more interested in foods with health benefits,” says Cathy Antinozzi, client development director of Advantage Sales and Marketing for Marzetti products. Following the trends to cleaner labels, the raw food movement and green branding,

Marzetti launched its Simply Dressed dressing line, which features extra virgin olive oil with a selection of classic dressing flavours, light options and vinaigrettes. Antinozzi also suggests merchandising refrigerated dressings with bagged salads to make shopping decisions easy for consumers. With such growth potential, opportunities abound for savvy produce managers who cross-merchandise salad dressings within the department, and offer fresh meal and snack ideas. July | August 2013

LIST IT

New products you need to know about!

New Indulgent Flavours Thick and deliciously creamy, Astro Original Greek yogourt is now available in three decadent dessert flavours – Banana Cream Pie, Cherry Cheesecake and Vanilla Crème Brûlée. Made with natural ingredients, Astro Original Greek is high in protein and gelatin free. astro.ca

Cashmere Goes UltraLuxe Cashmere bathroom tissue, inspired by the luxurious fabric that has defined softness for centuries, is now even softer. Cashmere UltraLuxe is a premium 2-ply bathroom tissue that is hypoallergenic and dermatologist approved. Cashmere.ca

July | August 2013

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Summer Fun Snacks Neal Brothers Foods has debuted two new flavours of hand-cut, kettle-style chips: Maple Bacon and Pink Himalayan Salt. Package design for the new line of chips features humorous corporate and family anecdotes. Campaign initiatives include traditional and online advertising, consumer events, POP material, and a redesigned website. nealbrothersfoods.com

Raw Food Snack Bar Tree of Life Canada has introduced an innovative, raw food bar to the portable snacking category. Eat N達kd bars are made with a whole-food approach: minimal processing; no added sugar, syrups or additives; and no wheat, dairy or gluten. treeoflife.ca

Healthy and Flavourful Sol Cuisine Inc. has added two new burgers to its line of frozen meatless products. The Indian Masala Burger is spiced with turmeric, green chili and ginger, and can be served in a sandwich, as an appetizer with chutney or as a meal with greens or legumes. The sprouted Quinoa Chia Burger features organic and sprouted quinoa, black chia and sweet potato. solcuisine.com

grocerybusiness.ca

July | August 2013

JUNE 24, 2013 – OAKVILLE, ONTARIO

LONGO’S

OPENS ITS NEW MARKET FRESH STORE Longo’s third store in Oakville, Ont. is also its 26th in the Greater Toronto Area. With more than 100 varieties of organic produce, this location also features unique offerings such as the first in-house Godiva Chocolatier boutique in Canada.

Anthony Longo, President and CEO

Rosanne Longo, Chair, Longo’s Family Charitable Foundation

The Longo’s team

Perry Caicco’s column will return.